Markets

Stocks edge up as markets await US inflation data

Pan-European Stoxx 600 index ends 0.2 per cent higher, with most sectors in positive territory

Wall Street’s main indices inched up on Tuesday as investors assessed a mixed producer prices reading and awaited crucial consumer prices data tomorrow. Photograph: Spencer Platt/Getty Images

Eoin Burke-Kennedy
Tue May 14 2024 - 18:23

Global stock indices were slightly higher on Tuesday as investors digested stronger-than-expected US producer price data and comments from Federal Reserve chairman Jerome Powell on inflation.

Mr Powell, speaking at a banking event in Amsterdam, said he expects US inflation to continue falling through 2024, but said his confidence in that has weakened after prices rose more quickly than expected through the first quarter.

Earlier on Tuesday, data showed US producer prices rose more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remained elevated early in the second quarter.

The key data of the week, though, will be Wednesday’s US consumer prices report. Investors have been watching inflation data closely as they weigh how soon the Fed might be able to lower interest rates.

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DUBLIN

The index’s three main financials – AIB, Bank of Ireland and PTSB – rose by 0.7 per cent, 1.65 per cent and 1 per cent respectively in an otherwise muted day’s trading. Earlier this month, the State further reduced its shareholding in AIB after the lender bought back nearly €1 billion of its shares from the Government.

Ryanair closed the session down 0.6 per cent at €18.78 while insulation maker Kingspan rose 0.7 per cent to €89.20. With the Government expected to announce enhanced housing targets in the coming weeks, homebuilders Cairn and Glenveagh rose by 0.7 per cent and 0.6 per cent.

LONDON

London stocks rose on Tuesday, led by advances in the personal goods sector, while tightness in the labour market and strong wage growth had investors on edge about interest rate cuts.

The benchmark index FTSE 100 was up 0.2 per cent after snapping a six-session winning streak on Monday. The midcap FTSE 250 index ended 0.3 per cent higher.

The personal goods sector climbed 2 per cent to lead gains on the index, while medical equipment and services followed with a 1.1 per cent rise. Meanwhile, data showed that British wages grew more than expected recently but other figures suggested the labour market was losing some of its inflationary heat, pushing money market participants to remain split on June rate cut bets.

In corporate news, Vodafone rose 4.7 per cent after the telecom operator met market forecasts for the year to end-March. Paddy Power owner Flutter lost 1.9 per cent after the largest online betting company reported its first-quarter results.

Anglo American tumbled 3.2 per cent to the bottom of the index, after Reuters reported the company is exploring an initial public offering of its diamond business De Beers, amid urging from BHP Group’s boss to consider takeover benefits.

EUROPE

The pan-European Stoxx 600 index ended 0.2 per cent higher, with most sectors in positive territory. Auto stocks led the gains, up more than 1.3 per cent for the session.

Shares of Delivery Hero jumped 26 per cent on Tuesday after it announced that Uber would buy its Foodpanda business in Taiwan as part of a wider $1.25 billion deal. Rival delivery firms Just Eat and HelloFresh also gained on the news.

The German Dax index was down 0.09 per cent at the close and the Cac 40 in France ended up 0.2 per cent.

NEW YORK

Wall Street’s main indices inched up on Tuesday as investors assessed a mixed producer prices reading and awaited crucial consumer prices data that could provide more clarity on the interest rate path in the world’s number one economy.

US producer prices increased more than expected in April amid strong gains in the costs of services and goods, leading traders to pare back bets of a first rate cut in September.

Federal Reserve chairman, Mr Powell, also said the PPI report was more “mixed” than “hot” given that prior data was revised lower.

Sticky inflation and persistent labour market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September, from March seen at the start of the year.

US-listed shares of Alibaba shed 6.7 per cent after reporting an 86 per cent drop in fourth-quarter profit.

- Additional reporting by Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

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